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Rising US-China tensions over rare earth minerals have boosted India’s strategic importance. As Washington seeks alternative trade partners, talks with New Delhi progress, possibly leading to tariff relief and a strengthened India-US trade relationship in the near future.
The trade war with China has increased India's importance
New Delhi: Recently, trade tensions between the US and China have been escalating, particularly regarding rare earth minerals. China has tightened its export restrictions on these minerals, which are used in the electronics, automobile, and defense industries.
Since China accounts for approximately 80 percent of the world's rare earth supply, the US is now forced to seek alternatives. In this context, India's importance has increased. The US now considers countries like India as reliable partners and wants to strengthen trade relations with them.
Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), a leading New Delhi-based think tank, has stated that the US is seeking new trade partners to reduce its dependence on China. India could become a reliable supply chain partner for the US, especially at a time when tensions between the US and China are at their peak.
According to GTRI, if a trade agreement is reached between India and the US, the US could grant India tariff access of 16-18 percent. This rate would be higher than the 15% exemption granted to the European Union and Japan but slightly lower than the 20% granted to Vietnam.
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The US currently imposes tariffs of up to 50 percent on India, the highest ever. This tariff was raised when India traded with Russia, angering the US.
The situation appears to be improving. Trade talks between India and the US have begun. An Indian delegation is currently in the US, and both countries are trying to find a win-win solution.
According to an Indian government source, US Ambassador-designate Sergio Gor recently visited India and met with various officials. The atmosphere of negotiations has since become positive.
The growing tensions between China and the United States have created a new opportunity for India. The United States is now taking steps to re-establish trade relations with India. If everything goes according to plan, India could receive tariff relief, and trade relations between the two countries could reach new heights.
